Are you saying in your article that the Fed is not independent? Is it acting on behalf of the President and Congress to help fuel never-ending government spending? Is its purpose now to suppress natural rates at the expense of the public? Would this story have a different slant if an investment bank was trying to control the bond market, like how they're portrayed regarding the sub-prime crisis?

10:04 am January 11, 2012

RKA wrote :

@JM As far as I understand it, the FED buying and selling US treasuries on the open market to control real interest rate. This is our “The United States” best mechanism for monetary policy. I am not sure why you think this is at the expense of the public.

Yes, Bernanke has prevented the free-market capitalist principle from controlling bond rates, ... by creating 5+ Trillion Dollars of negative (which means, Bernanke will have to print money to pay off these bonds unless someone else buys them from him). If Bernanke is forced to print, inflation follows.

WSJ is cheering this moronic action by Bernanke, because Bernanke bought these bonds from the Prime Dealers, -giving them freshly printed cash, and forcing US Citizens to be on the hook.

Bernanke, the unelected supreme leader of the USA, has made sure that Wall Street is protected at the cost of mortgaging the future of the country. Good Mole :)

11:23 am January 11, 2012

L W Minton wrote :

You write that "inflation .. has remained muted. "
Core inflation has risen straight up to 2.15% from 0.59% in the last year or so (leaving out food and fuel if you swallow that exception) with no policy in place, except hope, to reverse or even reduce that trend.
There was a time when 2% was a ceiling. As usual in government ceilings become floors and vice versa.
And just think, all we had to do is turn a blind eye to the damage we are doing to seniors who rely in large part on CD interest. Zeng should do an article on the morality of that.

11:54 am January 11, 2012

Chad wrote :

L.W. writes about morality. That word or notion is a bad joke these days. We live in an amoral world where raw power rules - and corrupts. But I want to write about something else.
Min Zeng's premise (and article) is incomplete, and I might add big time incomplete. The fact remains that the story is only half complete. As of now fiscal discipline (what bond markets are supposed to maintain) has been thrown out, brushed aside, trumped, if you will, by an out of control Federal Reserve. Does anyone really believe that in the end this will work? Hasn't central planning in all parts of the world been discredited? Hasn't raw powerl a la Bernanke been shown as always ending badly? Of course! This time is no different. Watch, wait, and anticipate a pay-off on this that will exceed our worse nightmares.
Chad in CO

1:44 pm January 11, 2012

adsanalytics wrote :

Inflation is indeed at bay judging by swap breakevens (see chart) which is helping to keep bond yields low. In addition, two other factors are at play: 1) it's tough to bet against the Fed and their balance sheet especially given their explicit goal at the moment is to keep long-term yields low and 2) in a world of very high global asset correlations and a switch of many sovereign bonds from a safe haven asset to a risky assets - Treasury bonds are just about the only asset left to buy for a bearish trade.

"That is partly due to the “flight to safety” that Treasurys have enjoyed as investors escape exposure to the euro-zone debt crisis, but it is also because of the Fed’s yield-suppressing actions, which are aimed at encouraging investors to take risks and bolster the economic recovery, and are made possible by a benign inflation environment."
"Benign inflation", tell that to those in a fixed income. Another "benign-sounding" articles. More cheerleading.

6:29 am January 12, 2012

Concerned human wrote :

@RKA There is a long list of people who you should read. You can find that list by putting in the word "economists" into the search engine, then choose Wikipedia. If you find that these people aren't to your liking, you can try the library. Also there are several institutes where these people gather to talk and share ideas. Cato, Mises, Hoover, EPI, FEE. They all have wonderful free information about what economists think. I am sure you will find this a very interesting subject to study. All the best.

7:27 am January 12, 2012

Man of the year wrote :

Bernanke is not an economist. He is a basketball player. Does anyone remember that picture of the extremely dirty backboard in the time man of the year. That basketball backboard was used more than any other. I would never challenge bernanke to a game of one on one. Basketball.

9:29 am January 12, 2012

Fraud Smasher wrote :

Paper investments of EVERY type (including CASH) have all turned out to be Rigged, Manipulated and crooked, inflated, deflated, and laundered. Get OUT of their Ponzi scams.. dump the paper and BUY all the Physical Silver (and a bit of Gold) that you can buy. Hock the house, dump the portfolio, cash out the ira, 401, etc, max the credit and buy the metal, take it HOME. (all the idiots who buy PAPER contracts-ETF's- for anything,, have just traded one fraudulent paper for another).
Metals (and food) will be the Last man standing after all this fraud goes KaBOOM.

11:48 am January 12, 2012

Rastaman wrote :

as a former bond vigilante, i found out Bernanke/Greenspan's criminality the hard way....now i am part of the SLA....and taking these FASCISTS down by proxy.

i won't stop until Bernanke's head is bouncing down the FED's steps.

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